Finance chiefs from the Group of 20 pledged to work together to curb multinational companies' leeway to shift profits to low-tax countries, endorsing an initiative spearheaded by Europe's biggest economies.

Britain, Germany and France today called on other G20 nations to restrict tax avoidance by international corporations that declare profits in territories where they can pay the lowest amounts.

"We are determined to develop measures to address base erosion and profit shifting, take necessary collective actions and look forward to the comprehensive action plan" the Organisation for Economic Cooperation and Development will present in July, the G20 said in a statement published after a two-day meeting in Moscow.

Western nations, seeking to shrink budget deficits, are looking for ways to raise more money from companies to placate voters squeezed by falling living standards and cuts to public spending.

The Paris-based OECD is working on plans which, if approved by the UK, Germany and France, will be put for adoption to the G20 in July.

"We do want businesses to pay the taxes that we set them in our countries," chancellor of the exchequer George Osborne said in Moscow. His German counterpart, Wolfgang Schaeuble, said that "multinationals, like local businesses," must "pay their fair share of tax."

Following the OECD's analysis, Britain will lead an international committee looking to rewrite transfer-pricing rules that allow companies to shift profits to lower-tax jurisdictions.

Germany will take the lead on work looking at erosion of the tax base, while France and the US will examine ways to determine tax jurisdiction, particularly for companies involved in e-commerce.

Amazon was among three US companies singled out by UK lawmakers last year for not paying enough tax in Britain. Members of Parliament's Public Accounts Committee criticised the online retailer, Starbucks and Google for using complex accounting methods to reduce their tax liabilities in the UK.

Testimony by the retailers at a November 13th hearing at times drew laughter from lawmakers who queried how Amazon made €20 million profit on sales of €9.1 billion across Europe and questioned why Starbucks remained in Britain as it had recorded losses for most of the 15 years it had operated in the country. Google paid £6 million in company tax in Britain last year.

The G20 also declared there would be no “currency war” today and deferred plans to set new debt-cutting targets in an indication of concern about the fragile state of the world economy.

Japan's expansive policies, which have driven down the yen, escaped criticism in a statement thrashed out in Moscow by financial policymakers from the G20, which groups developed and emerging markets and accounts for 90 per cent of the world economy.

After late night talks, finance ministers and central bankers agreed on wording closer than expected to a joint statement issued last Tuesday by the Group of Seven rich nations backing market-determined exchange rates.

A draft communique seen by delegates last night had steered clear of the G7's call for economic policy not to be targeted at exchange rates. But the final version included a G20 commitment to refrain from competitive devaluations and stated monetary policy would be directed at price stability and growth.

"The language has been strengthened since our discussions last night," Canadian finance minister Jim Flaherty told reporters. "It's stronger than it was, but it was quite clear last night that everyone around the table wants to avoid any sort of currency disputes."

The communique did not single out Japan for aggressive monetary and fiscal policies that have seen the yen drop 20 percent, a trend that may now continue.

"The market will take the G20 statement as an approval for what it has been doing - selling of the yen," said Neil Mellor, currency strategist at Bank of New York Mellon in London.

"No censure of Japan means they will be off to the money printing presses."

The statement reflected a substantial, but not complete, endorsement of Tuesday's statement by the G7 nations - the United States, Japan, Britain, Canada, France, Germany and Italy.

"We all agreed on the fact that we refuse to enter any currency war," French finance minister Pierre Moscovici told reporters.

The text also contained a commitment to credible medium-term fiscal strategy, but stopped short of setting specific goals.

A debt-cutting pact struck in Toronto in 2010 will expire this year if leaders fail to agree to extend it at a G20 summit of leaders in St Petersburg in September.

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